I have seen posts on this sub that say high wealth inequality can have a negative effect on growth, but how?
What about inequality causes this effect?
By what mechanism does high wealth inequality reduce economic growth?
byu/Ancient_Challenge173 inAskEconomics
Posted by Ancient_Challenge173
1 Comment
That’s a very difficult question. There are various theories about it. I’ll link to some previous threads on the topic.
There are probably several reasons, the most important reason may vary from country to country.
In [this thread](https://www.reddit.com/r/AskEconomics/comments/mqi4iq/is_there_an_ideal_level_of_inequality/), see the replies by pid6 and DutchPhenom. Also the reply by laurencekhoo [here](https://www.reddit.com/r/AskEconomics/comments/jvp165/what_are_the_economic_impacts_of_income/). We have had many threads on the topic here, not all of them are good, and not all of the comments in the threads I linked to are good either.